Legal Determinants of External Finance
Правовые детерминанты внешнего финансирования
1997-07-01
SCID: 54.1/qr6r8w2w
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capital markets developmentequity and debt marketsinvestor protectionslaw enforcement qualitylegal origin (French civil law vs common law)
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Abstract (AI)
ABSTRACT Using a sample of 49 countries, we show that countries with poorer investor protections, measured by both the character of legal rules and the quality of law enforcement, have smaller and narrower capital markets. These findings apply to both equity and debt markets. In particular, French civil law countries have both the weakest investor protections and the least developed capital markets, especially as compared to common law countries.
Key Findings
1
Both the character of legal rules and the quality of law enforcement predict capital market development.
2
Common law countries have more developed capital markets compared to French civil law countries.
3
Countries with poorer investor protections have smaller and narrower capital markets.
4
French civil law countries exhibit the weakest investor protections and the least developed capital markets.
5
Weaker investor protections correlate with less developed debt markets.
6
Weaker investor protections correlate with less developed equity markets.
Research Object
Countries (sample of 49 countries) characterized by their legal systems and investor protections
Research Subject
Relationship between investor protections (legal rules and law enforcement quality) and the size and breadth of external capital markets (equity and debt)
Publication Details
Publication Date
1997-07-01
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